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Insider Trading : A part of the fabric

Much before the news was public or announced officially, it saw itself being filtered out to the Wall Street, unofficially. Squawk boxes in Midtown Manhattan were seat for relaying of a market-moving bulletin after 10 a.m. The news being, an analyst from the investment house was going to raise his assessment of one of the major computer chips player, Amkor.
However, shares prices of Amkor were already rising by 9:30. Till the time the news was made public, they had already made advancement by 4 %. Making it very clear that the research by Ted Parmigiani, the analyst, had been leaked. The question is that how was the information leaked, and by whom? Parmigiani said, ,that there is only one explanation and that being someone from his own department was tipping off the traders of the firm along with the hedge funds.
The incident that happened seven years ago still rankles him and those that have happened up and down Wall Street since then. His career nearly ended, following the fallout. His firm, Lehman Brothers got eventually undone and collapsed spectacularly in September 2008, signifying the era of financial excess.
It’s hard to believe story by a single analyst, against the morality that has swept Lehman for long. However, the tale which is central to Wall Street in what happened post the crisis and to all the regulators who monitor it. Efforts have been trumpeted by various Federal agencies in rooting out insider trading, and they have landed their hands on some of the major players. However, most are of the opinion that such chicanery as witnessed in the case of Parmigiani, is as common and will continue to remain forever.
The most worrying thing in the whole case is that the SEC was provided with credible evidence on insider trading at Lehman around analyst research; however the SEC in the end didn’t bring any case. Two and a half years were spent by Parmigiani in giving evidence to the SEC. He came out with material showing that the sales representatives at Lehman were being tipped off on upcoming analysis and research. He also provided data on suspicious trading, and even charts and plans of the organization indicating how some members if the research department were seated next to sales and trading people. The SEC had opened an investigation and officials had agreed over the credibility of the evidence. But somehow everything died, including the case and the evidence. All that happened was, employees of Lehman getting scattered across Wall Street.
A lot of money, since then, has been spent by the SEC on plugging the leaks. Raj Rajaratnam, the hedge fund manager at Galleon, was sentenced to 11 years of imprisonment after he was declared as the modern face of insider trading by the SEC. However since then not much has been done , and many believe that it has now become institutionalized.

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